Ad-Supported Internet Brings over $1 Trillion to the U.S. Economy,
Representing 6 Percent of Country's Total GDP, According to IAB Study
Led by Harvard Business School Professor

Industry Responsible for 10.4 Million American Jobs, or 7.3% of Total
U.S. Nonfarm Employment, and Doubles Its Economic Contribution Since 2012

March 15, 2017 06:00 AM Eastern Daylight Time

NEW YORK--(EON: Enhanced Online News)--The ad-supported internet ecosystem generated $1.121 trillion for the
U.S. economy in 2016—more than doubling the contribution it made in
2012, according to a comprehensive study led by Prof. John Deighton, the
Baker Foundation Professor and the Harold M. Brierley Professor of
Business Administration, Emeritus, at the Harvard Business School.

“This study makes clear how crucial the ad-supported digital sector is
to the expansion of the broader U.S. business landscape”

The study, “The Economic Value of the Advertising-Supported Internet
Ecosystem,” commissioned by IAB (Interactive
Advertising Bureau), found that the ad-supported internet is
responsible for 10.4 million jobs in the U.S., accounting for 7.3
percent of the country’s total nonfarm employment. That is twice the
number of jobs the industry supported in 2012. In addition, the annual
growth rate of employment in the ad-supported internet economy was 19.6
percent from 2012 to 2016, far exceeding the U.S. total nonfarm
employment annual growth of 1.8 percent over the same four years.

The ad-supported internet ecosystem today accounts for 6 percent of the
U.S. gross domestic product (GDP), representing a 20 percent compound
annual growth rate from 2012 to 2016—five times the average American GDP
growth during the same period.

This is the third iteration of “The Economic Value of the
Advertising-Supported Internet Ecosystem” study, building upon earlier
reports released in 2012 and 2009.

Perhaps most surprising, 86 percent of the ad-supported internet
economy’s direct employment and value currently lie outside the
conventional centers of internet industry concentration—the San
Francisco Bay Area, New York’s Manhattan, Virginia’s Arlington County,
Boston’s Route 128, and Seattle/Tacoma. California’s Silicon Valley,
which is composed of five congressional districts, accounts for only 4
percent of jobs directly attributed to the ad-supported internet.

The research shows that every U.S. Congressional district boasts jobs
created by the ad-supported internet, with some of the biggest numbers
of jobs in states such as North Carolina, Texas, and Utah.

The report also spotlights several major sectors that have increased the
value of the ad-supported internet in the past fours years. For example,
online video was the most significant driver of new internet traffic
between the 2012 study and the latest report, as Over-the-Top (OTT)
television entered the mainstream. Other notable growth sectors that are
transforming business models and consumption patterns include
e-commerce, on-demand platforms, user-generated content platforms,
music-streaming services, and cloud computing.

“This study makes clear how crucial the ad-supported digital sector is
to the expansion of the broader U.S. business landscape,” said Professor
Deighton, who directed the current and earlier versions of the study.
“The internet fills an ever-widening role as market-maker to the U.S.
economy, first as a retail platform, next complementing traditional
advertising media, then becoming a mobile platform to reach people on
the move, and now as a platform to make markets in on-demand services.
It is little wonder that it’s growing at 20 percent per year.”

Drilling deeper into the jobs data, 4.1 million of the total 10.4
million jobs created by the ad-supported internet ecosystem were
directly tied to the industry. Mid-sized and small firms, and a sizable
number of self-employed individuals, account for 44 percent of those 4.1
million direct jobs in the digital advertising economy. The ecosystem's
largest firms accounted for the other 56 percent.

In addition, internet firms that provide products or services directly
to consumers experienced the largest growth in jobs since the last study
in 2012, creating a total of 734,000 new jobs directly tied to the
industry.

“The ad-supported digital ecosystem has proved to be a powerful economic
driver and job creator in the U.S.,” said Randall Rothenberg, President
and CEO, IAB. “This research underscores the industry’s ability to touch
lives and support families across the country, fueling the economy from
coast-to-coast, whether through big-name companies or mom-and-pop
operations that depend on the internet for their livelihoods. I’m proud
to say that IAB members make up the lion’s share of companies
responsible for the largest uptick in new jobs since 2012, and we’ll
work together to ensure that digital provides strong economic value to
the U.S. in the years to come.”

“The internet has become central to Americans’ day-to-day lives as they
read, watch, shop, and connect on digital screens,” said Dave Grimaldi,
Executive Vice President, Public Policy, IAB. “In turn, the U.S. economy
has reaped the benefits, becoming increasingly data driven, stimulating
growth at an accelerated pace—the rapid rise associated with the
take-off phase of an industry, rather than one that has been established
for over two decades.”

To read the complete findings of the 2017 “Economic Value of the
Advertising-Supported Internet Ecosystem,” please visit iab.com/economicvalue.

Methodology

Similar to the previous studies released in 2009 and 2012, the 2017
report primarily adopts an employment-based methodology by identifying
large firms in each layer of the internet and using a range of public
and private sources to estimate each firm’s revenue and employment as
well as estimates of aggregates of small firms and self-employed people.
In addition, the report also uses a top-down method based on the U.S.
Census Bureau’s databases to decide how to allocate the employment to
geographies at the state and congressional district level.

About IAB

The Interactive Advertising Bureau (IAB) empowers the media and
marketing industries to thrive in the digital economy. It is comprised
of more than 650 leading media and technology companies that are
responsible for selling, delivering, and optimizing digital advertising
or marketing campaigns. Together, they account for 86 percent of online
advertising in the United States. Working with its member companies, the
IAB develops technical standards and best practices and fields critical
research on interactive advertising, while also educating brands,
agencies, and the wider business community on the importance of digital
marketing. The organization is committed to professional development and
elevating the knowledge, skills, expertise, and diversity of the
workforce across the industry. Through the work of its public policy
office in Washington, D.C., the IAB advocates for its members and
promotes the value of the interactive advertising industry to
legislators and policymakers. Founded in 1996, the IAB is headquartered
in New York City and has a West Coast office in San Francisco.

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